“The ongoing merger (or majority stake) saga at Sprint Nextel Corp. (NYSE: S) may finally be coming to a close. The analysts at Argus feel confident that the Softbank/Sprint merger has a reasonably good chance for approval. In a research report released today, they point out that investors should take note of the 26% arbitrage difference between the current Sprint stock price and the $7.30 Softbank offer.

The long running turnaround at Sprint has lasted more than three years. While the company has made good progress in luring the lower margin prepaid business, attracting the higher margin postpaid subscribers, a business dominated by Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T), has been difficult. While prepaid is lower-margin than postpaid, it is one of the strongest parts of Sprint’s business. The research team at Argus sees increased competition in this segment due to refocused offers from the market leaders, Verizon and AT&T, as well as from smaller players like MetroPCS Communications Inc. (NYSE: PCS). In addition, Sprint has been able to launch 4G LTE service in more than 50 cities, though its rollout is still dwarfed by the larger carriers….”

Full article

“(MoneyWatch) Anat Admati can foresee the country’s economic ruin — or its salvation. However the chips fall, she’ll be able to say “I told you so.”

In an important new book due out next month, “The Bankers’ New Clothes,” the Stanford University economist warns that the U.S. banking system is as precarious today as it was before the 2008 housing crash. And given the vulnerability of the country’s biggest banks, it won’t take the kind of gale-force financial winds that blew down the global economy roughly four years ago to trigger another collapse.

“Even without a crisis, it’s a system that is living on the edge,” Admati said in an interview.

The result: Banks often lend too much, leading to periods of wild speculation, or too little, as lenders pass up worthy loans because they can make larger profits on riskier activities. In both cases the economy suffers. Banking is “too highly indebted, and it leaves people subject to all kinds of ups and downs and booms and bust,” she added. “There are indications that the financial system is becoming bigger and bigger and more knotted up in the sense of interconnectedness.”

Admati warns that one explosion could topple the entire system.

If it does, the catalyst is almost certain to be the same ingredient that brought down the financial system — debt. Big banks are “addicted” to it, said Admati, who notes that no other corporations come close to borrowing as much money as lenders do. Immediately before the financial crisis, many large banks had debts amounting to 97 percent of their total assets. To this day, banks rely almost entirely on debt to fund their business, commonly having less than 10 percent in equity, and often as little as 5 percent. …”

Full video interview & article

“……Foxconn’s hiring freeze may also be related to Apple’s move toward using more assemblers. For example, Foxconn rival Pegatron assembles about 40 percent of iPad minis, which have taken market share away from the original iPad, manufactured by Foxconn.

Analysts, investors and Apple fanboys (and fangirls) have kept a close eye on demand for the iPhone 5 as the company weathers increasing competition from Samsung. In January, concerns that the smartphone is underperforming were fueled by reports that iPhone 5 component orders had been cut. Exane BNP Paribas analyst Alexander Peterc estimates that Apple will sell 38 million iPhone 5s this quarter, 20 percent less than the prior period.

On the other hand, Strategy Analytics recent published a report that said the iPhone 5 became the best-selling smartphone globally in Q4, overtaking Samsung’s flagship Galaxy SIII. The research firm estimates that 27.4 million iPhone smartphones shipped worldwide during Q4, compared to 15.4 million Galaxy SIII units. But, as Natasha Lomas noted, neither company discloses quarterly handset sales and comparing the performance of the two devices is somewhat unfair, because the iPhone 5 launched last September and the Galaxy SIII came out back in May, meaning that the newer Galaxy SIV may have eaten into some of its sales….”

Full article

“It was only two weeks ago that Fed governor Jerremy Stein delivered a speech titled “Overheating in Credit Markets” in which he observed the obvious and warned that a new credit bubble was forming (not to mention housing, tech, student loan, GM channel stuffing and much more). And it was only yesterday that we learned that Bernanke, after a 6 year hiatus, just had his latest “everything is contained” moment. FromBusinessWeek:

“Federal Reserve Chairman Ben S. Bernanke minimized concerns that the central bank’s easy monetary policy has spawned economically-risky asset bubbles in comments at a meeting with dealers and investors this month, according to three people with knowledge of the discussions…..”

Full article and a memory jolt on the clam

“ObamaCare will act as a neutron bomb on employment in the U.S. for two basic reasons.

Sickcare is unsustainable for a number of interlocking reasons: defensive medicine in response to a broken malpractice system; opaque pricing; quasi-monopolies/cartels; systemic disconnect of health from food, diet and fitness; fraud and paperwork consume at least 40% of all sickcare funds; fee-for-service in a cartel system; employers being responsible for healthcare, and a fundamental absence of competition and transparency.

“According to the Deutsche BankLong-Term Asset Return Study, the last time interest rates were near current levels, in the 1950s, Treasury bonds lost 40% of their inflation-adjusted value over the following three decades. With bond yields near all-time lows, Richard Barley of The Wall Street Journalwrites, “For a one-percentage point rise in yields, 10-year U.S. Treasury holders face a price drop of nearly nine percentage points. Bonds have become so richly valued that UBS is reportedly reclassifying brokerage clients who are overweight bonds as “aggressive” investors — most likely to avoid future lawsuits if and when bonds lose value.

After significant investigation I have come to the conclusion that bonds should now come with a warning label.

It is no secret that the federal funds rate is extremely low.  It has been low for a while, and according to the Federal Reserve, should remain low through 2015.  After that, according to Warren Buffett, the billionaire chairman of Berkshire Hathaway it may be difficult for interest rates and inflation to remain low….”

Full article

“The Federal Reserve’s “very aggressive” easy money policy is going to stay that way for a “long time,” St. Louis Fed President James Bullard told CNBC on Friday.

“This is a monetary policy that packs a punch,” said Bullard, who’s a voting member on the Federal Open Market Committee (FOMC).

Uncertainty about the future of the central bank’s bond-buying program has weighed on the stock market in recent days.

But the St. Louis Fed president said in Friday’s “Squawk Box” interview, “I think policy is much easier than it was last year because the outright purchases are more potent tool than the ‘Twist’ program was … I don’t think markets have fully absorbed that switch.”

Bullard added, “Fed policy is very easy and it’s going stay easy for a long time.”

On Wednesday, the FOMC released minutes of its January meeting, which said “many participants” expressed concerns about “potential costs and risks arising from further asset purchases.” …”

Full article and video interview 

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“Well, not necessarily, but while Apple’s stock continues to grind lower, Google’s stock is on a tear.

And now analysts are jumping over themselves to get more bullish on Google.

Just yesterday, two separate analysts put $1,000 price targets on the stock.

What gives? Well, of course people can make up all kinds of stories about the momentum of either company, and their products and so forth.

But there’s a bigger macro-market story as well.

Throughout recent years, Apple has basically been an asset class on its own: Gold, commodities, stocks, bonds, and Apple.

If you were in Apple, your portfolio did great. If you weren’t, you almost certainly lagged the market. End of story.

At a time when people were uncertain about markets, Apple was a solid store of value. A company growing at abnormal speeds at a good price. Even if the economy were to slow, there was Apple, which you know would still be crushing it….”

Read more

“The stock market has “peaked out” and bonds may be on their way to a rebound, Marc Faber, publisher of the Gloom, Boom & Doom Report, said Thursday on CNBC.

“I think we have made an intermediate top, and it could be a longer-term top,” he said on “Fast Money.”

“I don’t think the market is as overbought as it was in ’87, so I don’t expect a crash. But I think for the time being, the market has peaked out, and I think in the meantime, bonds, which are extremely oversold, could rebound,” he said.

The S&P 500 closed at 1,502.52 Thursday. A level of 1,530 could prove to be a longer-term high, Faber said.

“What I maintained in earlier interviews is that either we have a correction now, and then we go up further or we go straight up high in July-August, from where we could crash, so I welcome a correction here,” he said. “The question will be, after this correction, we have to watch the market’s rebound, whether it can make a new high or not.” …”
Full commentary 

“TOKYO (AP) — Japanese authorities have identified the causes of fuel leaks and other problems withBoeing’s 787 but are still investigating the more serious battery problem that forced an emergency landing in January and the worldwide grounding of the jets.

An oil leak was caused by an improper paint job that led to a switch not working properly, while inadequate taping led to cracks in cockpit glass, and a faulty part led to braking problems, according to the Transport Ministry’s investigation released Friday into problems that occurred with the 787 Dreamliner in January.

The government issued orders to fix the problems with 787s operated by Japan Airlines and All Nippon Airways, the country’s two major carriers and the biggest customers for Boeing Co.’s new jet.

All 50 of the 787 jets in service around the world have been grounded for more than a month after a lithium-ion battery in a 787 operated by ANA overheated Jan. 16, forcing an emergency landing inwestern Japan. Earlier in January, a lithium-ion battery caught fire in a Japan Airlines 787 parked in Boston.

Boeing and U.S. authorities are also investigating, but Friday’s findings shed little light on the main problem.

The 787 is the first jet to extensively use lithium-ion batteries, which weigh less, charge faster and are more powerful than other kinds of batteries. Japanese manufacturer GS Yuasa makes the batteries for Boeing….”

Full article

“LONDON (Reuters) – Central banks are in a deep easy-money hole of their own digging that they will have to start filling in at some point. But that day still looks quite some way off.

Indeed, the Bank of Japan and the Bank of England are staking out a much bolder stance, brushing aside warnings from some that they might be stoking currency wars by depreciating their currencies or sowing the seeds of asset bubbles and inflation.

For Japan, inflation would be a solution, not a problem, after years of gently falling prices. The country’s nominal gross domestic product is no higher than it was 20 years ago, saddling the government with a debt-to-GDP ratio of 235 percent and climbing.

Britain seems simply to have concluded that higher inflation is a price worth paying to revive economic growth.

Three of the Bank of England’s nine-member Monetary Policy Committee, including Governor Mervyn King, voted this month to buy more bonds under its quantitative easing (QE) program even though inflation has been above target for five years and is unlikely to fall back to its 2 percent goal for another three years.

“There are clear signs of a softening of the commitment to inflation control across a number of economies,” said Simon Hayes, an economist at Barclays Capital in London.

A QUESTION OF JUDGMENT…”

Full article

ZIRP makes the timing right. Heading into a slow growth environment also helps.

“Don’t call it a boom just yet, but the pace of big-time leveraged buyouts, or LBOs, appears set to increase in 2013 as private-equity firms tap a massive pool of cash before they are forced to return the money to shareholders.

“The one thing I can tell you is that if it doesn’t increase, it’s not due to a lack of capital,” said Ronald Kahn, managing director at Chicago-based Lincoln International LLC, a firm that advises on mergers and acquisitions….”

Full article

” After the spectacular moves of late 2008, currency market volatility slowly reverted to more normal ranges, with a few exceptions over the course of 2009-2011. However, as Saxo Bank notes, since the start of the year, firebrand rhetoric is forcing currencies lower. The yen has fallen a stunning 17% against the US dollar and over 20% versus the Euro in the three months since Japan’s newly elected prime minister Shinzo Abe took charge. This has reignited the global currency wars. But who are the winners and losers?….”

Full infograhic & article

“America is set to become the United States of Britain, or worse, Peter Schiff, CEO of Euro Pacific Capital tells Yahoo.

“If you look at what’s happening in Britain right now you have a glimpse of what’s about to happen in the United States,” he states

Schiff pointed out that the British economy contracted in the fourth quarter of 2012 and says it will probably contract again this quarter. “Britain is moving into stagflation,” he declared. Stagflation refers to a situation where rising prices, or inflation, are occurring in an economy that is not growing.

This week, the British pound fell in comparison with 16 major currencies, Bloomberg reported.

And the outlook is not optimistic.

Mervyn King, governor of the Bank of England, expects inflation to remain above the targeted rate of 2 percent over the next two years. Meanwhile growth is expected to be weak.

King admits the United Kingdom has “big challenges” and he is fully cognizant of the limitations of policymakers, Bloomberg added.

Yet, Britain has maintained the ability to keep printing more pounds and issuing more debt.

In the United States, “we have the British disease even worse than the British,” Schiff said, citing examples such as far greater current account deficit the Britain and of course the luxurious curse of issuing the world’s reserve currency.

“They’re just having to deal with it earlier than we are.”

Britain can embark upon quantitative easing in a largely reckless fashion, yes. But it will not be given the leeway to dig its grave as deeply as the United States has, according to Schiff.

He believes accountability will be demanded from Britain while central banks around the globe continue supporting reckless behavior in the United States. However, at some point, he warns, the Federal Reserve will have to make tough decisions and ultimately America will be unable to pay its bills…..”

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“The Federal Reserve’s massive easing program is creating bubbles in the stock and housing markets, says economist, investment banker and “Currency Wars” author James Rickards.

“Equity prices are higher, housing prices are higher, but they’re higher for the wrong reason,” Rickards tells Newsmax TV in an exclusive interview. “They’re higher because of money printing. In other words, these are new asset bubbles forming.”

Major stock indices touched five-year highs Tuesday, and home prices, as measured by the S&P/Case-Shiller 20-city index, rose by the most in six years during the 12 months ended in November….”

Full article and video interview

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“Apple Inc’s manufacturing partner Foxconn Technology Group has frozen hiring at a Shenzhen plant that makes gadgets including the iPhone 5 and put the brakes on recruiting for other factories across China, but said the move was not linked to any single client.

Foxconn runs a network of factories across the world’s No. 2 economy that make products for tech companies from Hewlett Packard to Dell. It sought to pour cold water on a Financial Times report that it had imposed a hiring freeze while it slows production of Apple’s latest smartphone.

“Due to an unprecedented rate of return of employees following the Chinese New Year holiday compared to years past, our company has decided to temporarily slow down our recruitment process,” the company said in a statement.

“This action is not related to any single customer and any speculation to the contrary is false and inaccurate.” …”

Full article

“(Reuters) – Chesapeake Energy Corp said on Wednesday its internal investigation of the financial dealings of outgoing chief executive Aubrey McClendon found no “intentional” wrongdoing, but authorities and analysts said the issue was far from over.

The company’s statement also said a review by its board of directors found Chesapeake “did not violate antitrust laws” as it acquired oil and gas rights in Michigan in 2010.

The company did not say how it reached its conclusions and did not release a full report of itsinvestigation, and state and federal investigations of the company continue.

The U.S. Securities and Exchange Commission is examining McClendon’s financial transactions, while the Department of Justice and the attorney general in Michigan are investigating whether Chesapeake violated antitrust laws.

“The importance of independent – rather than internal – investigations cannot be emphasized enough in a case involving antitrust bid-rigging allegations,” said a spokeswoman for Michigan Attorney General Bill Schuette. “Our thorough, independent investigation into these serious allegations will continue.”

A series of Reuters investigations last year triggered civil and criminal probes into the second-largest U.S. producer of natural gas. Big shareholders Carl Icahn and Southeastern Asset Management took control of the board in June after McClendon was stripped of the chairmanship of the company he co-founded in 1989….”

Full article

IMO this is due to asset impairment still not seen on the balance sheet. Off balance sheet losses are still present and the free money off the tax payers back is slowing patching up the losses. You should be outraged over this!

“Interest rates have been kept at historically low levels by the Federal Reserve since the Great Recession began in 2008. The intent behind this was to spur loan activity and borrowing to grow the economy.

However, a combination of factors has led some of the largest banks in the United States, with cash flooding in at unprecedented levels, to cut their lending to the lowest level in five years. The average loan-to-deposit ratio for the top eight commercial banks fell to 84% in the fourth quarter from 87% a year earlier and 101% in 2007, according to data compiled by Credit Suisse Group A.G. (NYSE: CS). Lending as a proportion of deposits dropped at five of the banks and was unchanged at two, the data shows.

J.P. Morgan Chase & Co. (NYSE: JPM), which is the largest U.S. bank by assets, had the lowest year-end ratio in the group at 61%, down from 66% in 2011. Citigroup Inc. (NYSE: C) saw its ratio fall to 70% from 76% last year. North Carolina-based Bank of America Corp. (NYSE: BAC) dropped to 84% from 92%. Those lending ratios are the lowest at both banks in the past five years. Even southeastern regional bank leader, Sun Trust Banks Inc. (NYSE: STI) decreased to 94% from 96%.

Not all U.S. banks have seen declines. The loan-to-deposit ratios at Wells Fargo & Co. (NYSE: WFC) and U.S. Bancorp (NYSE: USB) remained virtually unchanged, while loans at PNC Financial Services Group Inc. (NYSE: PNC) actually grew.

With interest rates at lows and the economy at least somewhat better than in the dark days of 2008 and 2009, why has lending stalled? The first blush is to blame the banks, but the fact is they are drowning in liquidity and are desperately trying to make loans. Regulations and the memory of the collapse five years ago has tempered their ability to find retail or small business borrowers who can meet very stringent current credit standards. Simultaneously, many of the major U.S. banks have seen commercial and corporate clients hold on to cash and boost deposits while waiting for a meaningful improvement in the economy….”

Full article